The household cleaning product sector remains in the doldrums as consumers opt
for low-priced options and marketers try to combat both rising raw material costs
and retail price wars.
Tom Branna • Editorial Director
AFTER YEARS OF slugging growth, sales in the household cleaning category began to slump as consumers searched for bargains among the raft of sprays and spritzes out
there. Compounding the problem, say industry experts, is a lack of
innovation and rising raw material costs.
“Two-thousand eleven is shaping up to be a very challenging
year due to the weaker than expected consumer demand, higher
than expected commodity prices and continued price wars,” observed James Craigie, president and CEO, Church & Dwight.
What’s worse, most industry experts say that while costs may
seem to have stabilized a bit, they are projecting raw material prices
to continue to rise into 2012.
“We think there is stabilization (but) we see a slight increase
this year and next,”said Kaspar Rorsted, CEO, Henkel.
With raw material price volatility the norm these days, driven in
part by currency fluctuation, Procter & Gamble executives say that
they are determined to find alternatives as oil prices topped $100
a barrel again at presstime.
“We’re working very hard to find substitutes for raw materials
that have volatility in price. Not that we would move to the substitute wholesale, but what we want to do is have the ability to replace materials that spike in price,” Robert A. MacDonald,
chairman, president and CEO of P&G told analysts in a conference call.“A lot of those PhDs that we have are working to find
substitutes for oil-based chemicals and other chemicals, which are
not renewable. We want to get to 100% use of renewable ingredients for our products, and we’re working very hard on that. So over
time, you’re going to see a dislocation between the price of oil and
our cost of goods sold.”
Sales Slip in Most Categories
Add to all that the growing lack of product loyalty from consumers
who have come to rely on deep discounts before making their
household care purchases.
These on-going pressures come at a time when sales of house-
hold disinfectants, cleansers and related products are slipping in
the US. According to Euromonitor International, US sales of
household cleaners fell 1% last year to $9.7 billion (retail). In con-
trast, global sales rose 5.5% to $62.0 billion.
“Retailers want category growth, faster turns and higher margins,”
he told attendees at Cleaning Products 2011.“Promotions win in-
nings, [but] innovation and advertising win ballgames and cham-
According to Schmitz, marketers can’t afford to ignore mega-
trends, such as convenience, sustainability, wellness and multicul-
turalism. Indeed, according to the SymphonyIRI data, while other
all-purpose cleaner brands were losing share, Method’s sales
jumped 32% and sales of Mrs. Meyer’s surged nearly 26%, both
brands appeal to environmentally-conscious consumers.
Green brands aside, Schmitz cited Reckitt Benckiser (RB) as one
of the few players in the home care space that has done a good job
when it comes to discontinuous innovation.
“Reckitt forced consumers to trade up in the UK,” he asserted.
“A point of growth is always better than a point of margin—espe-
cially given current valuations.”
A few of RB’s innovations in 2011 include Air Wick 100% nat-
ural propellant spray and Freshmatic Odor Detect, which provides
an instant boost of freshness when odor is detected. Harpic Max,